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Kutak Rock Represents Underwriter in $500M Bond Issue Offered by Board of Education of the City of Chicago

July 18, 2017

Kutak Rock served as underwriter’s counsel on a $500 million bond issue that will allow the cash-strapped Chicago Public Schools (CPS) to keep its doors open for the 2017-2018 school year. The school district originally planned to offer $250 million in long-term general obligation bonds, but doubled the amount after receiving $1.1 billion in orders for the bonds. The school board had authorized the district to offer up to $500 million in bond sales.

An enticing yield, a security feature in which general account funds would be transferred to a security fund in the event of a payment default lasting more than 10 days, and the recent break in the state budget impasse all are believed to have helped drive demand for the bonds.

“Kutak Rock has conducted significant bond finance work throughout the Chicago metropolitan area and the State of Illinois,” says Lance Tyson, a partner in the firm’s Chicago office. “As a member of this community for more than 15 years, Kutak Rock is pleased we were able to work with the underwriter and expand our outreach to help Chicago Public Schools overcome extreme hurdles to structure an offering the market would accept.”

The school district offered general obligation bonds in the amounts of $285,000,000 (Series 2017A) and $215,000,000 (Series 2017B). Proceeds from the Series 2017A bonds will pay for capital projects, reimbursements of the swap termination payments and the issuance cost of the bonds. Proceeds from the Series 2017B bonds will supplant short-term debt with long-term debt, in addition to paying the issuance cost of the bonds.

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